Used Market Update: August 6, 2020
Wholesale auction sales of vehicles up to 8 years old for the week ending August 2 declined by 5% vs. the previous week (week ending July 26), with sales again reaching an estimated 98,000. While sales were down slightly week-over-week, the pace remains robust as weekly totals were only 2% below the J.D. Power pre-virus forecast of 101,000 units for the week.
Weekly Wholesale Auction Sales (thousands)
Segment-level auction sales on the mainstream side of the market were reduced by an average of 8%. Midsize pickup sales declined the most, down an average of 14% for the week. Following closely behind, small SUV, midsize car, midsize van and compact SUV segment sales declined 9%-13%. Remaining mainstream segments experienced sales declines for the period, however, losses were less than the overall sector average for the week. Premium segment sales increased an average of 3% for the week, however, results were mixed. Large premium car and large premium SUV sales declined 14% and 8%, respectively, while small premium SUV and midsize premium SUV sales increased 22% and 10%, respectively.
Wholesale Auction Prices Increase, However, Rate of Growth Slows Again
Wholesale auction prices improved for the 15th consecutive week, rising 0.6 percentage points for the week ending August 2. The rate of growth continues to slow as last week’s result was the third consecutive week of slowing price appreciation and the smallest week-over-week increase recorded since prices began their recovery in April. However, prices have grown 34% during the past 15 weeks and are now 14% higher than at the beginning of March.
Weekly Wholesale Auction Price Index (Mar 1 = 100)
Wholesale prices for mainstream segments the week ending August 2 increased an average of 0.6% vs. the prior week. Midsize pickup prices were the strongest, increasing an average of 1.8%. Most other mainstream segments experienced flat to up slightly price movement for the period. Premium prices once again performed slightly better than their mainstream counterparts. On average, premium segment prices increased 1% which was supported by compact, midsize and large premium car increases of approximately 1.5%. Premium SUVs also fared well last week as prices were up by collective average of slightly less than 1% for the week.
While wholesale prices remain strong, the declining rate of growth week over week indicates a slowing market. Prices are expected to drift lower in August as pent-up demand wanes and pandemic-related macro-economic headwinds increase. By year's end, prices are expected to be more or less on par with pre-virus levels. It is important to note, however, that while the outlook is relatively optimistic, there remains a great deal of uncertainty surrounding the effect of new virus outbreaks, the potential for another round of federal stimulus, and overall employment conditions. Given these unknowns, a heightened degree of market volatility should be expected.
Used Vehicle Retail Sales Performance Improved While Prices Continued to Rise
Sales of used vehicles at franchised dealers were 3% above pre-virus forecast for the week ending August 2. The result reflected a small improvement after four weeks of slowing performance vs. our pre-virus forecast. Used retail prices continued to rise, increasing 0.4 percentage points week-over-week in the week ending August 2. Prices are now 5.1% higher than the index baseline level from March 1.